Correlation Between Berkshire Hathaway and LIFEWAY FOODS
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and LIFEWAY FOODS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Berkshire Hathaway and LIFEWAY FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and LIFEWAY FOODS, you can compare the effects of market volatilities on Berkshire Hathaway and LIFEWAY FOODS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Berkshire Hathaway with a short position of LIFEWAY FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and LIFEWAY FOODS.
Diversification Opportunities for Berkshire Hathaway and LIFEWAY FOODS
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Berkshire and LIFEWAY is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and LIFEWAY FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFEWAY FOODS and Berkshire Hathaway is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Berkshire Hathaway are associated (or correlated) with LIFEWAY FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFEWAY FOODS has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and LIFEWAY FOODS go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and LIFEWAY FOODS
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.54 times more return on investment than LIFEWAY FOODS. However, Berkshire Hathaway is 1.84 times less risky than LIFEWAY FOODS. It trades about 0.27 of its potential returns per unit of risk. LIFEWAY FOODS is currently generating about -0.05 per unit of risk. If you would invest 41,490 in Berkshire Hathaway on September 1, 2024 and sell it today you would earn a total of 4,855 from holding Berkshire Hathaway or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. LIFEWAY FOODS
Performance |
| Timeline |
| Berkshire Hathaway |
| LIFEWAY FOODS |
Berkshire Hathaway and LIFEWAY FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and LIFEWAY FOODS
The main advantage of trading using opposite Berkshire Hathaway and LIFEWAY FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, LIFEWAY FOODS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LIFEWAY FOODS will offset losses from the drop in LIFEWAY FOODS's long position.| Berkshire Hathaway vs. Singapore Telecommunications Limited | Berkshire Hathaway vs. EAT WELL INVESTMENT | Berkshire Hathaway vs. COMBA TELECOM SYST | Berkshire Hathaway vs. Citic Telecom International |
| LIFEWAY FOODS vs. SIVERS SEMICONDUCTORS AB | LIFEWAY FOODS vs. Darden Restaurants | LIFEWAY FOODS vs. Reliance Steel Aluminum | LIFEWAY FOODS vs. Q2M Managementberatung AG |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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